ISLAMABAD (June 07 2005): The Federal Government has reduced the income tax for salaried persons where the income chargeable under “salary” exceeds 50 percent of his taxable income. The Finance Bill 2005 placed before the National Assembly on Monday, spells out the following rates of income tax:
— Where taxable income does not exceed Rs 100,000 the rate of tax is nil.
— For taxable income exceeding Rs 100,000 but not exceeding Rs 200,000, the rate of tax will be 3.5 percent of amount exceeding Rs 100,000;
— Where taxable income is Rs 200,000 but does not exceed Rs 400,000, the rate of tax charged will be Rs 3,500 plus 12 percent of the amount exceeding Rs 200,000;
— Where taxable income exceeds Rs 400,000 but does not exceed Rs 700,000, the rate of tax will be Rs 27,500 plus 25 percent of the amount exceeding Rs 400,000;
— Where taxable income exceeds Rs 700,000, the rate of tax will be Rs 102,500 plus 30 percent of the amount exceeding Rs 700,000.
In case of salaried taxpayers having salary as the only source of income, the requirement to file a tax return has been rescinded. Also an employer's certificate will not be required in case the employer has filed a mandatory tax deduction statement of his employees.
The Finance Bill also proposes to enhance the existing tax reduction limit of 50 to 75 percent for teachers and researchers.
For senior citizens the tax rebate at 50 percent subject to the upper limit of Rs 300,000, has been extended up to Rs 400,000.